question
Finding slope
answer
M (slope) = change in Y/change in x
question
Binding
answer
Price ceiling less than P or price floor greater than P
question
Non-binding
answer
Price ceiling greater than P or price floor less than P
question
Law of Demand
answer
Price of product negatively related to the amount of goods purchased
P↑ Qd↓
P↑ Qd↓
question
Demand shifters
answer
Income, population, preferences, prices related to goods (2 normal goods)
question
Normal/inferior Goods
answer
Normal = Would buy regardless of how high income
inferior = only would buy if can't afford normal good
inferior = only would buy if can't afford normal good
question
Complements
answer
Goods that are often purchased together
question
Substitutes
answer
Goods that are of the same quality and use - interchangeable
question
Law of Supply
answer
Price of a good and the amount producers/firms are willing and able to offer for sale are positively related P↑ Qs↑
question
Supply Shifters
answer
# of sellers, technology, resource prices, taxes & subsidies, expectations of sellers, prices of other goods the seller could produce
question
Finding equilibrium
answer
Qs=Qd
question
GDP (Expenditure Approach) =
answer
C+I+G+NX
question
NGDP basket =
answer
Price of all goods x Quantity of all Goods
Pi x Qi
i= all goods
Pi x Qi
i= all goods
question
RGDP=
answer
NGDP / GDP Deflator or another price index x 100
R=N/D
R=N/D
question
Growth/Inflation rate =
answer
Current value - previous value/previous value x 100
question
GDP definition
answer
Sum of all money values of all final goods and services produced in the domestic economy in a specified time.
question
Types of Unemployment
answer
Structural, cyclical, frictional, seasonal
question
CPI =
answer
Market Basket in a given year / Mkt bskt in BASE Year x 100
question
GDP deflator
answer
Average level of price of goods and services produced domestically
question
Computing Price Index (CPI or GDP deflator)
answer
1. Compute market basket in base year (P x Q)
2. Compute Market Basket in Given Year (Qby x Pgy)
3. Find Price Index of Given year:
CPIgy= Mkt Basket GY / Mkt Basket BY x 100
2. Compute Market Basket in Given Year (Qby x Pgy)
3. Find Price Index of Given year:
CPIgy= Mkt Basket GY / Mkt Basket BY x 100
question
Demand/Supply Equation
answer
Q = a -bP
I.e, Qd = 24000-500P
Qs = 6000+1000P
I.e, Qd = 24000-500P
Qs = 6000+1000P
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